Currently, many airlines employ revenue management systems (RMS), such as the Talus™ AirRMS, in an attempt to allocate inventory more effectively to appropriate fare classes. By periodically adjusting the inventory available in a given fare class, an airline can more nearly optimize the revenue generated through the sale of inventory. As the flight date approaches, more inventory tends to be allocated to the more expensive fare classes. As such, airlines are able to ensure that they are charging the least price-sensitive segment of their customer base a near optimal price. The price-bias of such a system is designed to target different population segments in which customers fall.
One way to measure the effects of the price-bias or restrictive-bias associated with a given flight is to measure the load factor associated with a given flight. A load factor is defined as a percentage of tickets currently booked for a given flight as compared to the total number of tickets available for the flight. For example, a 95% load factor associated with a given flight indicates that 95% of the tickets that are available for the flight have been booked, with 5% remaining unbooked. Typically a small load factor indicates that tickets were too expensively priced or that there were too many restrictions imposed for the given flight, thereby discouraging customers from purchasing them. Conversely, large load factors typically indicate that prices were not expensive enough or that the imposed restrictions were not strict enough. In such cases an airline may have traded higher margins for a larger volume of ticket sales that may result in a dilutionary effect on over-all sales in the long run.
By under-booking a flight (e.g., allocating a relatively greater amount of inventory to more expensive fare classes so as to purposefully not sell all available inventory), an airline is able to insure that tickets are not sold at too inexpensive a price. By over-booking a flight (i.e., purposefully booking too many tickets) the airline is able to account for “no-shows”, or customers who purchase a ticket but fail to arrive at the appropriate airport gate in time for departure. Using known revenue management techniques, airlines can estimate how much to under-book or over-book a given flight based on such factors as the historical and current demand for the given flight. Both under-booking and over-booking levels are measured by load factors. For example, an airline may determine that the appropriate booking level for a given flight may be 105% (e.g., on a 100 seat flight, 105 tickets should be booked). Similarly, an airline may determine that the appropriate booking level for a given flight may be 75% (e.g., on a 100 seat flight, only 75 tickets should be booked).
Airline customers generally may be categorized as either business travelers or leisure travelers. Business travelers are typically less price-sensitive than leisure travelers, but are also less flexible in their travel arrangements. Accordingly, by associating certain travel restrictions with discounted fare classes, airlines can successfully “fence out” business travelers from purchasing discount tickets. This is done because business travelers typically have the resources to afford more expensive fares. Imposing such restrictions creates a restrictive-bias designed to separate an airline's customer base into different groups, each group having different price sensitivity and travel flexibility.
For many travelers, especially leisure travelers, the inconvenience associated with making slight alterations to a given set of travel plans is relatively low. Leisure travelers typically make their travel arrangements well in advance and are receptive to changing those arrangements, especially if a benefit of some sort is offered to them. The advantage an airline can gain from such changes in travel plans is relatively high. For example, an airline will often overbook a given flight and subsequently offer benefits to customers who agree to travel on a different flight. The increased revenue in ticket sales from overbooking gained by the airline typically exceeds the cost associated with moving overbooked passengers from one flight to another. Leisure travelers who agree to be “bumped” from one flight to another typically perceive the benefit gained to be greater than the inconvenience of switching flights. By increasing their ability to bump customers, and thereby more efficiently control the demand for various itineraries, airlines could substantially increase their revenue.
For the foregoing reasons, there is a need for a system and method of facilitating the sale of travel products while maintaining both a price bias and a product bias.